Economic Loss (negligence) Template Answer

Question 1

General intro about what the negligence is etc.
It is a well established…

Answer 1

Rule you cant claim in negligence for pure economic loss.

Question 2

This was reflected by the decision in….

Answer 2

Spartan Steel v Martin and Co Ltd - here an electric power cable outside the claimants factory was negligently cut by the defendants workmen. C could claim for damage to melts that were on the production line (physical damage) the loss of profits on those melts (consequential economic loss from the physical damage) but couldn’t claim for the loss of profit whilst the factory was closed (pure economic loss).
This decision was confirmed in Weller v Foot and Mouth research.
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Question 3

The exception to this rule is….

Answer 3

That you are able to sue for economic loss resulting from a negligent misstatement if you can prove a special relationship exits, Hedley Byrne v Heller.
What constitutes a special relationship was considered in the case Caparo v Dickman:
The possession of a special skill or expertise.
A reliance by C on the advice.
The advice is communicated directly to C and not through a third party such as a newspaper.
The person giving the advice knows that it’s required for the purpose described at the time to D. He must know the advice is going to be acted upon without the claimant taking further independent advice.
There is no disclaimer.
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Question 4

Normally the advice will be given in…..

Answer 4

Quasi business lie situations. However its been decided in Chaudhry v Prabhakar that a special relationship can exist even if the advice was given in a social situation or in the course of social relationships.
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